Exhibit 10.22


 


REGISTRATION
RIGHTS AGREEMENT


 


This Registration Rights Agreement (the “Agreement”) is made and
entered into as of this 8th day of June, 2004 by and among Primal Solutions,
Inc., a Delaware corporation (the “Company”), and the “Investors” named in that
certain Purchase Agreement by and among the Company and the Investors (the
“Purchase Agreement”).


 


The parties hereby agree as follows:


 


1.               Certain
Definitions.


 


As used in this Agreement, the following terms shall have the following
meanings:


 


“Affiliate” means, with respect to any person, any other person
which directly or indirectly controls, is controlled by, or is under common
control with, such person.


 


“Business Day” means a day, other than a Saturday or Sunday, on
which banks in New York City are open for the general transaction of business.


 


“Common Stock” shall mean the Company’s common stock, par value
$0.01 per share, and any securities into which such shares may hereinafter be
reclassified.


 


“Investors” shall mean the Investors identified in the Purchase
Agreement and any Affiliate or permitted transferee of any Investor who is a
subsequent holder of any Warrants or Registrable Securities.


 


“Prospectus” shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective amendments
and all material incorporated by reference in such prospectus.


 


“Register,” “registered” and “registration” refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.


 


“Registrable Securities” shall mean the Shares and the shares of
Common Stock issuable (i) upon the exercise of the Warrants, if any, and (ii)
any other securities issued or issuable with respect to or in exchange for
Registrable Securities; provided, that, a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration Statement or Rule
144 under the 1933 Act, or (B) such security becoming eligible for sale by the
Investors pursuant to Rule 144(k).


 


“Registration Statement” shall mean any registration statement
of the Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.


 


“Required Investors” means the Investors holding a majority of
the Registrable Securities.


 

















 


“SEC” means the U.S. Securities and Exchange Commission.


 


“Shares” means the shares of Common Stock issued pursuant to the
Purchase Agreement.


 


“1933 Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.


 


“1934 Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.


 


“Warrants” means, the warrants to purchase shares of Common
Stock issued to the Investors pursuant to the Purchase Agreement, the form of
which is attached to the Purchase Agreement as Exhibit A.


 


“Warrant Shares” means the shares of Common Stock issuable upon
the exercise of the Warrants.


 


2.               Registration.


 


(a)                                Registration
Statements.


 


(i)                                     Promptly
following the closing of the purchase and sale of the securities contemplated
by the Purchase Agreement (the “Closing Date”) but no later than forty-five
(45) days after the Closing Date (the “Filing Deadline”), the Company shall
prepare and file with the SEC one Registration Statement on Form SB-2 (or on
such form of registration statement as is then available to effect a
registration for resale of the Registrable Securities), covering the resale of
the Registrable Securities in an amount at least equal to the number of Shares
plus the number of shares of Common Stock necessary to permit the exercise in
full of the Warrants.  Such Registration
Statement may also include other shares of Common Stock or other securities of
the Company.  Such Registration
Statement shall include the plan of distribution attached hereto as Exhibit
A.  Such Registration Statement also
shall cover, to the extent allowable under the 1933 Act and the rules
promulgated thereunder (including Rule 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities.  The Registration Statement (and each
amendment or supplement thereto) shall be provided in accordance with
Section 3(c) to the Investors prior to its filing or other submission.


 


(ii)                                  Additional
Registrable Securities.  Upon the
written demand of any Investor and upon any change in the Warrant Price (as
defined in the Warrant) such that additional shares of Common Stock become
issuable upon the exercise of the Warrants, the Company shall prepare and file
with the SEC one or more Registration Statements on Form SB-2 or amend the
Registration Statement filed pursuant to clause (i) above, if such Registration
Statement has not previously been declared effective (or on such form of
registration statement as is then available to effect a registration for resale
of such additional shares of Common Stock (the “Additional Shares”)) covering
the resale of the Additional Shares, but only to the extent the Additional
Shares are not at the time covered by an effective Registration Statement.  Such Registration Statement may also include
other shares of Common Stock or other securities of the Company.  Such Registration Statement also shall
cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of


 


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additional shares of Common Stock resulting
from stock splits, stock dividends or similar transactions with respect to the
Additional Shares.  The Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided in accordance with
Section 3(c) to the Investors prior to its filing or other submission.


 


(iii)                               Promptly
following the date (the “Qualification Date”) upon which the Company becomes
eligible to use a registration statement on Form S-3 to register the Registrable
Securities or Additional Shares, as applicable, for resale, but in no event
more than ten (10) days after the Qualification Date (the “Qualification
Deadline”), the Company shall file a registration statement on Form S-3
covering the Registrable Securities or Additional Shares, as applicable (or a
post-effective amendment on Form S-3 to the registration statement on Form
SB-2) (a “Shelf Registration Statement”) and shall use commercially reasonable
efforts to cause such Shelf Registration Statement to be declared effective as
promptly as practicable thereafter.


 


(b)                               Expenses.  The Company will pay all expenses associated
with each registration, including filing and printing fees, the Company’s
counsel and accounting fees and expenses, costs associated with clearing the
Registrable Securities for sale under applicable state securities laws, and
listing fees, but excluding discounts, commissions, fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
with respect to the Registrable Securities being sold.


 


(c)                                Effectiveness.


 


(i)                                     The
Company shall use commercially reasonable efforts to have the Registration
Statement, any post effective amendment thereto and any Shelf Registration
Statement declared effective as soon as practicable.  The Company shall notify the Investors by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24) hours, after
any Registration Statement or post effective amendment is declared effective
and, upon request, shall provide the Investors with copies of any related
Prospectus to be used in connection with the sale or other disposition of the
securities covered thereby.


 


(ii)                                  The
Company may delay the disclosure of material non-public information concerning
the Company, by suspending the use of any Prospectus included in any
registration contemplated by this Section containing such information, the
disclosure of which at the time is not, in the good faith opinion of the
Company, in the best interests of the Company (an “Allowed Delay”); provided,
further, that so long as the Registration Statement is on Form SB-2 or on any
other form that does not allow for incorporation by reference of reports and
other materials filed by the Company pursuant to Section 13(a) or 15(d) of
the 1934 Act, the Company may upon written notice to the Investors suspend
sales under the Registration Statement to the extent, but in any such case only
to the extent, necessary to allow any post-effective amendment to the
Registration Statement or supplement to the Prospectus to be prepared and filed
with the SEC and, if necessary, declared effective (and such suspension shall
be deemed to be an Allowed Delay) for the period commencing at the time that
the Company disseminates a press release announcing its preliminary financial
results for any fiscal period or announcing a material development and ending
on the second Business Day after the earlier of (A) the date that the related
report on Form 10-KSB, 10-QSB or 8-K, as applicable, is filed with the SEC and
(B) the


 


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date on which such report is required to be
filed under the 1934 Act (without regard to Rule 12b-25 promulgated
thereunder); provided, further, that in the event the Company determines in
good faith, based on the advice of counsel, that the matters disclosed in such
press release require the filing of a post-effective amendment to the
Registration Statement, the Company shall file such post-effective amendment
promptly and in no event later than ten (10) Business Days after the date such
matters are first disclosed to the public and shall use commercially reasonable
efforts to have such post-effective amendment to the Registration Statement
declared effective as promptly as practicable and the period for which the
Company may suspend the use of the Registration Statement shall be extended to
the earliest to occur of (W) the date the post-effective amendment to the
Registration Statement is withdrawn by the Company, (X) the date such
post-effective amendment to the Registration Statement is declared effective by
the SEC, (Y) the second Business Day after the SEC has notified the Company
that either (I) it has elected not to review the post-effective amendment to
the Registration Statement or (II) it has no further comments on the
post-effective amendment to the Registration Statement or (Z) 45 days after the
initial filing of the post-effective amendment to the Registration Statement
with the SEC.


 


(iii)  The Company shall promptly
(a) notify the Investors in writing of the existence of material non-public
information giving rise to an Allowed Delay, (b) advise the Investors in
writing to cease all sales under the Registration Statement until the end of
the Allowed Delay and (c) use commercially reasonable efforts to terminate an
Allowed Delay as promptly as practicable.


 


3.               Company
Obligations.  The Company will use
commercially reasonable efforts to effect the registration of the Registrable
Securities in accordance with the terms hereof, and pursuant thereto the
Company will, as expeditiously as possible:


 


(a)                                use
commercially reasonable efforts to cause such Registration Statement to become
effective and subject to Section 2(c)(ii) to remain continuously effective
for a period that will terminate upon the earlier of (i) the date on which all
Registrable Securities covered by such Registration Statement as amended from
time to time, have been sold, and (ii) the date on which all Registrable
Securities covered by such Registration Statement may be sold pursuant to Rule
144(k) (the “Effectiveness Period”) and advise the Investors in writing when
the Effectiveness Period has expired;


 


(b)                               prepare
and file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the period specified in Section 3(a);


 


(c)                                provide
copies to the Investors to review each Registration Statement and all
amendments and supplements thereto no fewer than three (3) Business Days prior
to their filing with the SEC and not file any document to which such counsel
reasonably objects;


 


(d)                               furnish
to the Investors (i) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the Company one (1) copy of any
Registration Statement and any amendment thereto, each preliminary prospectus
and Prospectus and each amendment or supplement thereto (other than any portion
of any thereof which


 


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contains
information for which the Company has sought confidential treatment), and (ii)
such number of copies of a Prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as each
Investor may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor that are covered by the related
Registration Statement;


 


(e)                                use
commercially reasonable efforts to (i) prevent the issuance of any stop order
or other suspension of effectiveness and, (ii) if such order is issued, obtain
the withdrawal of any such order at the earliest possible moment;


 


(f)                                  use
commercially reasonable efforts to register or qualify or cooperate with the
Investors in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions listed on Schedule 3(f) hereto and do any and all
other commercially reasonable acts or things necessary or advisable to enable
the distribution in such jurisdictions of the Registrable Securities covered by
the Registration Statement; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(f), (ii)
subject itself to general taxation in any jurisdiction where it would not
otherwise be so subject but for this Section 3(f), or (iii) file a general
consent to service of process in any such jurisdiction;


 


(g)                               use
commercially reasonable efforts to cause all Registrable Securities covered by
a Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;


 


(h)                               promptly
notify the Investors, at any time when a Prospectus relating to Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that,
or upon the happening of any event as a result of which, the Prospectus
included in a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and at the request of any such
holder, promptly prepare and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such Prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing; and


 


(i)                                   otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, take such other
actions as may be reasonably necessary to facilitate the registration of the
Registrable Securities hereunder; and make available to its security holders,
as soon as reasonably practicable, but not later than the Availability Date (as
defined below), an earnings statement covering a period of at least twelve (12)
months, beginning after the effective date of each Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the 1933 Act, including Rule 158 promulgated thereunder (for the purpose of
this subsection


 


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3(i),
“Availability Date” means the 45th day following the end of the fourth fiscal
quarter that includes the effective date of such Registration Statement, except
that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal
year, “Availability Date” means the 90th day after the end of such fourth
fiscal quarter).


 


(j)                                     With
a view to making available to the Investors the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time permit the Investors to sell shares of Common Stock to the public without
registration, the Company shall use commercially reasonable efforts to:  (i) make and keep public information
available, as those terms are understood and defined in Rule 144, until the
earlier of (A) six months after such date as all of the Registrable Securities
may be resold pursuant to Rule 144(k) or any other rule of similar effect or (B)
such date as all of the Registrable Securities shall have been resold; and (ii)
file with the SEC in a timely manner all reports and other documents required
of the Company under the 1934 Act.


 


4.               Reserved.


 


5.               Obligations of
the Investors.


 


(a)                                Each
Investor shall furnish to the Company upon request a completed Questionnaire in
the form attached to this Agreement as Exhibit B (a “Selling Holder
Questionnaire”).  The Company shall
advise the Investors in writing of the proposed first anticipated filing date
of any Registration Statement (the “Filing Date”) at least four (4) Business
Days prior to such Filing Date which notice shall request that the Investors
complete and return the Selling Holder Questionnaires not later than one (1)
Business Day prior to the Filing Date (the “Information Deadline Date”).  Notwithstanding any provision herein to the
contrary, the Company shall not be required to include the Registrable
Securities of an Investor in a Registration Statement if such Investor fails to
furnish to the Company a fully completed Selling Holder Questionnaire in
writing to the Company on or prior to the close of business on the Information
Deadline Date and shall not be required to pay any liquidated or other damages
under Section 2 hereof to any such Investor resulting solely from the
failure of such Investor to provide a completed Selling Holder Questionnaire to
the Company on or prior to the Information Deadline Date.


 


(b)                               Each
Investor, by its acceptance of the Registrable Securities agrees to cooperate
with the Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all of
its Registrable Securities from such Registration Statement.


 


(c)                                Each
Investor agrees that, upon receipt of any notice from the Company of either (i)
the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii)
the happening of an event pursuant to Section 3(h) hereof, such Investor
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities, until the
Investor’s receipt of the copies of the supplemented or amended prospectus filed
with the SEC and until any related post-effective amendment is declared
effective and, if so directed by the Company, the Investor shall deliver to the
Company


 


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(at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Investor’s possession of the Prospectus covering
the Registrable Securities current at the time of receipt of such notice.


 


(d)                                 Each
Investor hereby acknowledges that it is aware that the United States securities
laws may prohibit a person who has material, non-public information concerning
the Company from purchasing or selling securities of the Company and agrees to
comply with all such laws.


 


(e)                                Each
Investor agrees that in effecting sales or other dispositions of Registrable
Securities, it will comply with all applicable requirements of the 1933 Act,
including any prospectus delivery requirement applicable to such sales or
dispositions.


 


(f)                                  Each
Investor (i) acknowledges (A) its current status as an officer and/or director
of the Company, and (B) that it potentially may be classified as an “affiliate”
of or a person that may exert control over the Company, and (ii) agrees that
such status or classification may significantly reduce the Company’s ability to
register or qualify or cooperate with the Investors in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws under Section 3(f) herein.


 


6.               Indemnification.


 


(a)                                Indemnification
by the Company.  The Company will
indemnify and hold harmless each Investor and its officers, directors, members,
employees and agents, successors and assigns, and each other person, if any,
who controls such Investor within the meaning of the 1933 Act, against any
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof; (ii) any blue sky application or other document executed by
the Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Registrable Securities under the securities laws
thereof (any such application, document or information herein called a “Blue
Sky Application”); (iii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (iv) any violation by the Company or its agents of any
rule or regulation promulgated under the 1933 Act applicable to the Company or
its agents and relating to action or inaction required of the Company in
connection with such registration; or (v) any failure to register or qualify
the Registrable Securities included in any such Registration in any state where
the Company or its agents has affirmatively undertaken or agreed in writing
that the Company will undertake such registration or qualification on an
Investor’s behalf and will reimburse such Investor, and each such officer,
director or member and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
(i)


 


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so made in
conformity with information furnished by such Investor or any such controlling
person in writing specifically for use in such Registration Statement or
Prospectus or (ii) in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to such Investor a reasonable period of time
before the pertinent sale or sales by such Investor; Provided further,
that in no event shall the liability of the Company exceed the greater of the
Purchase Price (as defined in the Purchase Agreement) or the fair market value
of the Securities (as defined in the Purchase Agreement) then held by such
Investor at the time of such loss, claim, damage or liability.


 


(b)                               Indemnification
by the Investors.  Each Investor
agrees, severally but not jointly, to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its directors, officers,
employees, stockholders and each person who controls the Company (within the
meaning of the 1933 Act) against any losses, claims, damages, liabilities and
expense (including reasonable attorney fees) resulting from (i) any untrue
statement of a material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary prospectus or
amendment or supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent that such untrue statement or
omission is contained in any information furnished in writing by such Investor
to the Company specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto or (ii) any failure of such
Investor to comply with the covenants and agreements contained in this
Agreement respecting resale of the Registrable Securities and such Investor
will reimburse the Company, each of its directors, officers, agents and
employees, and any controlling persons for any reasonable legal and other
expense incurred by the Company, its directors, officers, agents and employees,
and any controlling persons, in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action.  In no event shall
the liability of an Investor be greater in amount than the dollar amount of the
proceeds (net of all expense paid by such Investor in connection with any claim
relating to this Section 6 and the amount of any damages such Investor has
otherwise been required to pay by reason of such untrue statement or omission)
received by such Investor upon the sale of the Registrable Securities included
in the Registration Statement giving rise to such indemnification obligation.


 


(c)                                Conduct
of Indemnification Proceedings.  Any
person entitled to indemnification hereunder shall (i) give prompt notice to
the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party; provided
that any person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but
the fees and expenses of such counsel shall be at the expense of such person
unless (a) the indemnifying party has agreed to pay such fees or expenses, or
(b) the indemnifying party shall have failed to assume the defense of such
claim and employ counsel reasonably satisfactory to such person or (c) in the
reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such claim on behalf of such
person); and provided, further, that the failure of any
indemnified party to give notice as provided herein shall not


 


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relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties.  No indemnifying
party will, except with the consent of the indemnified party, consent to entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.


 


(d)                               Contribution.  If for any reason the indemnification
provided for in the preceding paragraphs (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless, other than as expressly
specified therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations. 
No person guilty of fraudulent misrepresentation within the meaning of
Section 11(f) of the 1933 Act shall be entitled to contribution from any
person not guilty of such fraudulent misrepresentation.  In no event shall the contribution obligation
of a holder of Registrable Securities be greater in amount than the dollar
amount of the proceeds (net of all expenses paid by such holder in connection
with any claim relating to this Section 6 and the amount of any damages
such holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission) received by it upon
the sale of the Registrable Securities giving rise to such contribution
obligation.


 


7.               Miscellaneous.


 


(a)                                Amendments
and Waivers.  This Agreement may be
amended only by a writing signed by the Company and the Required
Investors.  The Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of the Required Investors.


 


(b)                               Notices.  All notices and other communications
provided for or permitted hereunder shall be made as set forth in
Section 9.4 of the Purchase Agreement.


 


(c)                                Assignments
and Transfers by Investors.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the Investors and their respective successors and assigns.  An Investor may transfer or assign, in whole
or from time to time in part, to one or more persons its rights hereunder in
connection with the transfer of Registrable Securities by such Investor to such
person, provided that such Investor complies with all laws applicable thereto
and provides written notice of assignment to the Company promptly after such
assignment is effected.


 


(d)                               Assignments
and Transfers by the Company.  This
Agreement may not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of the Required Investors,
provided, however, that the Company may assign its


 


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rights and
delegate its duties hereunder to any surviving or successor corporation in
connection with a merger or consolidation of the Company with another
corporation, or a sale, transfer or other disposition of all or substantially
all of the Company’s assets to another corporation, without the prior written
consent of the Required Investors, after notice duly given by the Company to
each Investor.


 


(e)                                Benefits
of the Agreement.  The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.


 


(f)                                  Counterparts;
Faxes.  This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  This Agreement may also be
executed via facsimile, which shall be deemed an original.


 


(g)                               Titles
and Subtitles.  The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.


 


(h)                               Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by applicable
law, and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.  To the extent permitted
by applicable law, the parties hereby waive any provision of law which renders
any provisions hereof prohibited or unenforceable in any respect.


 


(i)                                   Further
Assurances.  The parties shall
execute and deliver all such further instruments and documents and take all
such other actions as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the agreements herein
contained.


 


(j)                                   Entire
Agreement.  This Agreement is
intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein.  This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.


 


(k)                                Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York
located in New York County and the United States District Court for the
Southern District of


 


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New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby.  Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Agreement.  Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court.  Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
 EACH OF THE PARTIES HERETO WAIVES ANY RIGHT
TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.


 


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IN WITNESS WHEREOF, the parties have executed
this Agreement or caused their duly authorized officers to execute this
Agreement as of the date first above written.


 


	
  The Company:

  	
  PRIMAL SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Joseph R. Simrell

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  and President

  	
   

  



 


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGES FOR INVESTORS FOLLOW]


 


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[INVESTOR’S SIGNATURE PAGE]


 


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Exhibit A


 


Plan of Distribution


 


The selling stockholders, which as used herein includes donees,
pledgees, transferees or other successors-in-interest selling shares of common
stock or interests in shares of common stock received after the date of this
prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of common stock or interests in
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions.  These dispositions may be at fixed prices,
at prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or
at negotiated prices.


 


The selling stockholders may use any one or more of the following
methods when disposing of shares or interests therein:


 


• ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;


 


• block
trades in which the broker-dealer will attempt to sell the shares as agent, but
may position and resell a portion of the block as principal to facilitate the
transaction;


 


• purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;


 


• an
exchange distribution in accordance with the rules of the applicable exchange;


 


• privately
negotiated transactions;


 


• short
sales effected after the date of this Prospectus;


 


• through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;


 


•
broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;


 


• a
combination of any such methods of sale; and


 


• any other
method permitted pursuant to applicable law.


 


The selling stockholders may, from time to time, pledge or grant a
security interest in some or all of the shares of common stock owned by them and,
if they default in the performance of their secured obligations, the pledgees
or secured parties may offer and sell the shares of common stock, from time to
time, under this prospectus, or under an amendment to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act amending the


 


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list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus.  The selling stockholders also may transfer
the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.


 


In connection with the sale of our common stock or interests therein,
the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in
short sales of the common stock in the course of hedging the positions they
assume.  The selling stockholders may
also sell shares of our common stock short and deliver these securities to
close out their short positions, or loan or pledge the common stock to
broker-dealers that in turn may sell these securities.  The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).


 


The
aggregate proceeds to the selling stockholders from the sale of the common
stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any.  Each
of the selling stockholders reserves the right to accept and, together with their
agents from time to time, to reject, in whole or in part, any proposed purchase
of common stock to be made directly or through agents.  We will not receive any of the proceeds from
this offering. Upon any exercise of the warrants by payment of cash, however,
we will receive the exercise price of the warrants.


 


The selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act
of 1933, provided that they meet the criteria and conform to the requirements
of that rule.


 


The selling stockholders and any underwriters, broker-dealers or
agents that participate in the sale of the common stock or interests therein
may be “underwriters” within the meaning of Section 2(11) of the
Securities Act.  Any discounts, commissions,
concessions or profit they earn on any resale of the shares may be underwriting
discounts and commissions under the Securities Act.  Selling stockholders who are “underwriters” within the meaning of
Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act.


 


To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth
in an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.


 


In
order to comply with the securities laws of some states, if applicable, the
common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers.  In
addition, in some states the common stock may not be sold unless it has been
registered or 


 


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qualified
for sale or an exemption from registration or qualification requirements is
available and is complied with.


 


We
have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling stockholders and their affiliates.  In addition, we will make copies of this
prospectus (as it may be supplemented or amended from time to time) available
to the selling stockholders for the purpose of satisfying the prospectus
delivery requirements of the Securities Act. 
The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.


 


We
have agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus.


 


We
have agreed with the selling stockholders to keep the registration statement of
which this prospectus constitutes a part effective until the earlier of (1)
such time as all of the shares covered by this prospectus have been disposed of
pursuant to and in accordance with the registration statement or (2) the date
on which the shares may be sold pursuant to Rule 144(k) of the Securities Act.


 


Each selling stockholder has represented and warranted to us that, at
the time it acquired the securities subject to the registration statement, it
did not have any agreement or understanding, directly or indirectly, with any
person to distribute any of such securities. 
We have advised each selling stockholder that it may not use shares
registered on the registration statement to cover short sales of our common
stock made prior to the date on which the registration statement was declared
effective by the Securities and Exchange Commission.


 


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Exhibit B


 


[Form of Questionnaire]


 


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Schedule 3(f)


 


Blue Sky Jurisdictions


 


New York


New Jersey


Connecticut


Massachusetts


Pennsylvania


Texas


California


Nevada


 


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